APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Niu Technologies / Equity Capital Markets

In the latest filing, <a href="https://www.smartkarma.com/entities/27469" target="_blank" data-smartkarma-citation="entities:27469:1">Niu Technologies (NIU US)</a> has announced that it will be raising up to US$104m in its upcoming US IPO. As like before, the proceeds from the IPO will be mainly used to upgrade and expand of manufacturing facilities, research and develop new products, and expand its distribution network.
Based on our comparison with Yadea, we found that Niu, despite being a premium brand, has not been able to earn better margins than Yadea which begs the question how much of a premium can the company trade at compared to international and local peers. 
In this insight, we will summarize our views from previous insight, compare the company with other US-listed Chinese education peers, and last but not least, we will run the deal through our ECM framework.

In the latest filing, Niu Technologies (NIU US) has announced that it will be raising up to US$104m in its upcoming US IPO. As like before, the proceeds from the IPO will be mainly used to upgrade and expand of manufacturing facilities, research and develop new products, and expand its distribution network.
Based on our comparison with Yadea, we found that Niu, despite being a premium brand, has not been able to earn better margins than Yadea which begs the question how much of a premium can the company trade at compared to international and local peers. 
In this insight, we will summarize our views from previous insight, compare the company with other US-listed Chinese education peers, and last but not least, we will run the deal through our ECM framework.

Niu Technologies (小牛电动) IPO Review - Premium Branding Does Not Translate to Higher Margins

<a href="https://www.smartkarma.com/entities/27469" target="_blank" data-smartkarma-citation="entities:27469:1">Niu Technologies (NIU US)</a> is planning to raise US$150m in its upcoming US IPO. Proceeds from the IPO will be mainly used to upgrade and expand of manufacturing facilities, research and develop new products, and expand its distribution network.
Niu is a fast-growing smart e-scooter manufacturer and distributor in China. The company has grown its revenue by 117% and 95% YoY in FY2017 and 1H FY2018 while profitability has been improving with gross margin expansion and adjusted net loss margin shrinking consistently.
Retail sales volume has been the main driver of the strong revenue growth while average selling price per e-scooter had a relatively muted growth. The company has demonstrated strong operating cash flow generation despite relying on franchised stores and distributors to sell its product because the company requires cash upfront payment for most distributors.
In this insight, we will look into the company's operational and financial performance, examine the competition in the electric scooter industry, point out potential corporate governance issues, and suggest questions to ask the management.

Niu Technologies (NIU US) is planning to raise US$150m in its upcoming US IPO. Proceeds from the IPO will be mainly used to upgrade and expand of manufacturing facilities, research and develop new products, and expand its distribution network.
Niu is a fast-growing smart e-scooter manufacturer and distributor in China. The company has grown its revenue by 117% and 95% YoY in FY2017 and 1H FY2018 while profitability has been improving with gross margin expansion and adjusted net loss margin shrinking consistently.
Retail sales volume has been the main driver of the strong revenue growth while average selling price per e-scooter had a relatively muted growth. The company has demonstrated strong operating cash flow generation despite relying on franchised stores and distributors to sell its product because the company requires cash upfront payment for most distributors.
In this insight, we will look into the company's operational and financial performance, examine the competition in the electric scooter industry, point out potential corporate governance issues, and suggest questions to ask the management.

Niu Technologies (小牛电动) Pre-IPO Review - Riding the Second Electric Wave

CHINA - Healthcare, Steel, Autos, Education, Research From Beijing

Scott Laprise/ 乐天虎

CHINA - Healthcare, Steel, Autos, Education

Research From Beijing

We try to provide our clients with on the ground research of what is really going on here in China.

Our business goal and focus are to provide on the ground research This will give our clients an early look at changes about to happen in China and to give them an edge.

To have the ability to go out and check a car dealer or visit a hospital or go see any new launches in the market. We have regular products such as our steel monthly, a visit to the traders and discuss with them what they see. The steel trader visit gives a great early proxy to spending by the government. We do weekly car dealer visits to see how the car companies are doing but this is also a proxy to the consumer and how is the consumer thinking these days. We visit school and hospitals and attend events to find out what people are really thinking.

Our primary method of research is fundamental research starting with a neutral view, analyzing the financials and building the case for the company. We rarely look at the news as we have found the views to be incomplete lacking the understanding of Chinese thinking. We strive for a fresh differential view on the Chinese stocks. Most Chinese research is made by analysts reading the news and reading other Chinese analysts giving clients the same old view. We also try to give you a better understanding of how the Chinese look at issues. The English media tends to focus on examining issues from the western view giving investors often an incomplete view.

If you want your research done by professionals on the ground who are able to give you early feedback instead of most research taking a long distance view driven by the media. This is our value proposition: focused on the ground research to limited clients. We think this is the best way to give you the best chance to generate alpha for your funds.

Equity Bottom-Up

China Mengniu Dairy Co / Equity Bottom-Up

<ul>
<li>Advertising taking a fundamental shift due to China.</li>
<li>China is the biggest sponsor of the World Cup.</li>
<li>Advertising is China-centric to build China image.</li>
<li>Some companies NOT interested in international branding.</li>
<li>Three companies advertising in Chinese only – no English at all.</li>
<li>Budweiser ad private in Chinese only for Chinese only.</li>
<li>Two China listed stocks vastly outperformed the market index.</li>
<li>How much will the World Cup be Chinese? Sponsors, fans?</li>
<li>Sports in China, the NBA is #1 in the world in the world.</li>
</ul>


Advertising taking a fundamental shift due to China.
China is the biggest sponsor of the World Cup.
Advertising is China-centric to build China image.
Some companies NOT interested in international branding.
Three companies advertising in Chinese only – no English at all.
Budweiser ad private in Chinese only for Chinese only.
Two China listed stocks vastly outperformed the market index.
How much will the World Cup be Chinese? Sponsors, fans?
Sports in China, the NBA is #1 in the world in the world.


CHINA CONSUMER - World Cup Advertising – China Dominates Yet Does Not Participate

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to gamble in overseas casinos. Our contacts in the industry have already seen immediate termination of marketing efforts in mainland China by Macau casinos, which imply lower near-term gaming revenue in our view. A loss of higher-margin direct VIP business could also mean lower overall VIP margin for the Macau casinos, as junket VIP margins are one to two percentage points lower compared with direct VIP margins. Near-term sentiment will be unfavorable for the Macau gaming stocks. However, we gauge that marketing activities in mainland China will resurface as the dust settles, though casinos will take a lower-profile approach.To reflect the short-term impact, if we reduced 2016 full-year VIP, mass and slot revenue by 7.5% for our Macau gaming coverage, there would still be no impact on fair value estimates. Therefore, we maintain our long-term forecast and long-term-based, DCF-generated fair value estimates. Our narrow moat ratings also remain unchanged.Analyst: Chelsey Tam

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to gamble in overseas casinos. Our contacts in the industry have already seen immediate termination of marketing efforts in mainland China by Macau casinos, which imply lower near-term gaming revenue in our view. A loss of higher-margin direct VIP business could also mean lower overall VIP margin for the Macau casinos, as junket VIP margins are one to two percentage points lower compared with direct VIP margins. Near-term sentiment will be unfavorable for the Macau gaming stocks. However, we gauge that marketing activities in mainland China will resurface as the dust settles, though casinos will take a lower-profile approach.To reflect the short-term impact, if we reduced 2016 full-year VIP, mass and slot revenue by 7.5% for our Macau gaming coverage, there would still be no impact on fair value estimates. Therefore, we maintain our long-term forecast and long-term-based, DCF-generated fair value estimates. Our narrow moat ratings also remain unchanged.Analyst: Chelsey Tam

Negative Near-Term Read-Throughs from the Detainment of Crown Resorts' Marketing Executives in China

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Yadea Group Holdings / Equity Capital Markets

Yadea Group, one of the largest two-wheeler electric vehicle manufacturers in China, plans to raise US$166-240m through its IPO.The company has consistently grown faster than the overall market and commands a dominant position in a highly fragmented market. However, all is not hale and hearty as there are a few corporate governance issues that one needs to be aware of, apart from the inordinately high terminations of distributors of late. In addition, the deal doesn't score well on our framework.

Yadea Group, one of the largest two-wheeler electric vehicle manufacturers in China, plans to raise US$166-240m through its IPO.The company has consistently grown faster than the overall market and commands a dominant position in a highly fragmented market. However, all is not hale and hearty as there are a few corporate governance issues that one needs to be aware of, apart from the inordinately high terminations of distributors of late. In addition, the deal doesn't score well on our framework. 

Yadea Group IPO - Riding an Electric Wave but with Governance and Valuation Baggage

Hong Kong

Yadea Group is a leading electric two wheeler brand in China. The company produces electric bikes and scooters.

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Yadea Group Holdings (1585 HK)

Niu Technologies (小牛电动) IPO Review - Premium Branding Does Not Translate to Higher Margins

In the latest filing, Niu Technologies (NIU US) has announced that it will be raising up to US$104m in its upcoming US IPO. As like before, the...

Zhen Zhou, Toh

Niu Technologies (小牛电动) Pre-IPO Review - Riding the Second Electric Wave

Niu Technologies (NIU US) is planning to raise US$150m in its upcoming US IPO. Proceeds from the IPO will be mainly used to upgrade and expand of...

Zhen Zhou, Toh

CHINA CONSUMER - World Cup Advertising – China Dominates Yet Does Not Participate

Advertising taking a fundamental shift due to China. China is the biggest sponsor of the World Cup. Advertising is China-centric to build China...

Scott Laprise/ 乐天虎

Negative Near-Term Read-Throughs from the Detainment of Crown Resorts' Marketing Executives in China

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to...

Morningstar, Inc.

Yadea Group IPO - Riding an Electric Wave but with Governance and Valuation Baggage

Yadea Group, one of the largest two-wheeler electric vehicle manufacturers in China, plans to raise US$166-240m through its IPO.The company has...

Sumeet Singh

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